CPUC Envisions New Future for Low-Income Efficiency Program

The California Public Utilities Commission adopted major improvements for the future of its longstanding low-income energy efficiency program, incorporating an innovative multifamily whole-building model and encouraging deeper energy savings for low-income households for programs that will be launched in 2021. The decision reflects an important re-envisioning of the future of the low-income efficiency program which has historically focused on lighter-touch energy savings in single-family homes, even though more than 3 million Californians—and nearly half of all low-income Californians—live in low-income multifamily buildings that could benefit from efficiency upgrades.

A New Direction for the Energy Savings Assistance (ESA) Program

The CPUC’s new vision for its low-income efficiency program takes a bolder approach than previous tune-ups, and re-envisions the program from the ground up. The Commission declared that ESA’s original statutory goal of providing all eligible and willing low-income residents the opportunity to participate in low-income energy efficiency programs will be met by 2020, has and emphasized  a need for innovative design approaches in future utility programs, focused on achieving deeper energy savings and better addressing the needs of the multifamily sector.

The Commission explicitly directed the utilities to include a new multifamily whole building program in their next ESA program applications, and to look to successful low-income program models from other California agencies and other states as models. A streamlined whole-building program process, rather than having separate in-unit and common area programs, allows affordable multifamily property owners to better plan and incorporate efficiency improvements as part of a property refinancing and apply ESA at a portfolio-wide scale. The CPUC’s decision also calls for third-party design and implementation of the new multifamily whole-building program, a notable restructuring from the historically utility-designed and utility-implemented programs. This design would borrow lessons from the CPUC’s general efficiency program as well as successful programs such as California’s Low-Income Weatherization Program (LIWP) and Massachusetts’ LEAN Multifamily Program.

The CPUC decision also emphasizes the value of having a single statewide implementer for the multifamily whole-building program and strongly recommends that the four investor-owned utilities incorporate a single-implementer model in their upcoming program proposals, which would be more efficient and less expensive than having four separate programs aimed at achieving the same program goals. This would also allow for better coordination with other statewide administrators, such as the LIWP and Solar on Multifamily Affordable Housing (SOMAH) programs, both statewide models for the low-income multifamily housing sector.

The ESA program—designed to help low-income households save money on their monthly energy bills through no-cost weatherization services while improving their health, comfort, and safety—has been in need of modernization for some time. The program has long-struggled to achieve deep energy savings and to fully spend its budget. Even after programmatic modifications by previous Commission decisions to establish formal energy savings targets and to prevent future underspending, many utility programs continued to accumulate unspent funds and fall short of their deeper savings goals.

What Does This Mean for Low-Income California Households?

Until now, the ESA program has largely focused on energy savings and weatherization in single-family homes, even though residents of multifamily housing account for at least one-third of the eligible population and multifamily housing represents a vast potential for cost-effective energy and bill savings. The Commission’s decision will go a long way toward unlocking and achieving these savings—easing the energy burden in low-income households in multi-unit apartments and improving their health and safety.

Additionally, the modernization of the ESA program would bring it in line with more successful low-income efficiency programs from other states, as well as recent policy recommendations for low-income multifamily program design and for achieving California’s ambitious climate change and energy efficiency targets.

Low-income households face a disproportionate energy burden, spending up to three times as much of a percent of their income on energy as other households and up to fifteen percent of their total income on energy alone. Over three million Californians, and nearly half of all low-income Californians, live in low-income multifamily buildings. On top of higher energy burdens, these multifamily households face additional obstacles to realizing the benefits of existing low-income efficiency programs, due to barriers to participation and an embedded bias towards single-family homes in previous programs.

What’s Next?

The Commission’s decision sets out guidance for the utilities (Pacific Gas & Electric, Southern California Edison, Southern California Gas Company, and San Diego Gas & Electric) in designing their ESA programs for the 2021-2026 program years. Applications from the utilities will be due in November, after which a formal proceeding will be launched ahead of the CPUC approving the final design of the post-2021 program.

As the utilities prepare their applications for the next program cycle, NRDC together with the Energy Efficiency for All Coalition—which includes the California Environmental Justice Coalition, Greenlining Institute, Association for Energy Affordability, and California Housing Partnership Coalition, among others—will be working to ensure that the CPUC’s vision for the future of the ESA program is realized, and that California’s low-income households are able to benefit from the full potential of the ESA program.